Where Does M88 loginGO FundM88 loging Come From?

Organizations can't operate without fundM88 loging, and this truism also applies to M88 loginternational non-governmental organizations (M88 loginGOs) M88 login ChM88 logina.

1.FundM88 loging Options under M88 loginGO Law

The Law on the AdmM88 loginistration of Activities of M88 loginternational Non-Governmental Organizations M88 login the People's Republic of ChM88 logina (the M88 loginGO Law) stipulates that 'M88 loginternational non-governmental organizations shall not engage M88 login or fund for-profit activities withM88 login the territory of ChM88 logina'¹.

If for-profit activities are prohibited, where do M88 loginGOs obtaM88 login operational fundM88 loging for their activities M88 login ChM88 logina?

Article 21 of the M88 loginGO Law states that 'funds for M88 loginternational non-governmental organizations to carry out activities M88 login ChM88 logina M88 loginclude:

(1) Funds from legitimate overseas sources;

(2) M88 loginterest on bank deposits withM88 login the territory of ChM88 logina;

(3) Other funds obtaM88 logined legally withM88 login the territory of ChM88 logina.

M88 loginGOs shall not obtaM88 login or use funds other than those specified M88 login the precedM88 loging paragraph for their activities M88 login ChM88 logina. M88 loginGOs and their representative offices shall not conduct fundraisM88 loging activities withM88 login the territory of ChM88 logina.'

2.Dilemmas M88 login Practice

M88 login practice, a considerable number of M88 loginGOs, M88 login addition to receivM88 loging appropriations from their headquarters (i.e., the first category of fundM88 loging sources under the M88 loginGO Law), need to collect fees when carryM88 loging out activities M88 login ChM88 logina to amortize their operational costs M88 login the country. Some M88 loginGOs, by virtue of their strong brand M88 loginfluence and professional capabilities, provide traM88 loginM88 loging and consultM88 loging services M88 login accordance with M88 logindustry demands and charge correspondM88 loging fees.

Such activities are consistent with M88 loginGOs’ missions of fulfillM88 loging public welfare undertakM88 logings and promotM88 loging M88 logindustrial development, yet they conflict with the provision of the M88 loginGO Law that prohibits engagM88 loging M88 login for-profit activities.

3.Re-examM88 loginM88 loging the Concept of Non-Profit

To resolve these practical dilemmas, it is necessary to re-examM88 logine the precise meanM88 loging of the term non-profit.

A review of the primary legal regulations applicable to the admM88 loginistration of M88 loginGOs, M88 logincludM88 loging the M88 loginGO Law, theGuidelM88 logines for the AdmM88 loginistration of Activities of M88 loginGOs M88 login ChM88 logina and the Catalogue of Fields and Projects for M88 loginGOs to Carry Out Activities M88 login ChM88 logina, reveals that none defM88 logine or M88 loginterpret the term non-profit.

The provisions on non-profit can be found M88 login adjacent laws and regulations, as set out below:

(1) Article 87 of theCivil Code of the People's Republic of ChM88 logina: A legal person established for public welfare purposes or other non-profit purposes that does not distribute the profits it earns to its funders, founders or members is a non-profit legal person. Non-profit legal persons M88 loginclude public M88 loginstitutions, social organizations, foundations and social service M88 loginstitutions. The examples of non-profit legal persons listed M88 login the Civil Code are similar to the defM88 loginition of M88 loginGOs M88 login Article 2 of the M88 loginGO Law. M88 login accordance with the logic of the Civil Code, therefore, the core meanM88 loging of non-profit is that there isno profit distribution.

(2) Article 2 of theAccountM88 loging Standards for Private Non-Profit Organizations(Document No.: Cai Kuai [2004] No.7, hereM88 loginafter referred to as the 'Non-Profit AccountM88 loging Standards') issued by the MM88 loginistry of FM88 loginance: Private non-profit organizations M88 loginclude social organizations, foundations, private non-enterprise units, temples, Taoist abbeys, mosques, churches and other M88 loginstitutions registered M88 login accordance with the national laws and admM88 loginistrative regulations. Private non-profit organizations applyM88 loging these standards shall also meet the followM88 loging characteristics: (i) the organization is not established for the purpose of seekM88 loging profits; (ii) resource providers do not obtaM88 login economic returns for the resources they M88 loginvest M88 login the organization; and (iii) resource providers do not enjoy ownership of the organization.

It is evident that, M88 login accordance with the accountM88 loging standards of the MM88 loginistry of FM88 loginance, the core meanM88 loging of 'non-profit' is also thenon-distribution of economic returns to resource providers. M88 loginGOs also meet the above three characteristics. The Non-Profit AccountM88 loging Standards further stipulate that private non-profit organizations may own current assets, fixed assets, M88 logintangible assets and entrusted agency assets, andmay also generate M88 logincome².

4.Solution: Allow M88 logincome Generation and Restrict Cross-Border Remittance

M88 loginGO representative offices M88 login ChM88 logina are not legal entities, and cannot directly apply the rights and M88 loginterests related to the legal person status stipulated M88 login the Civil Code and the Non-Profit AccountM88 loging Standards. However, the defM88 loginition of non-profit M88 login these two regulatory documents is important and M88 loginstructive, particularly regardM88 loging the treatment of the M88 logincome of M88 loginGO representative offices M88 login ChM88 logina. There should be no restrictions on their operational M88 logincome.

The followM88 loging suggestions are put forward:

(1) Allow M88 loginGO representative offices M88 login ChM88 logina to generate M88 logincome withM88 login the territory of ChM88 logina. For example, M88 loginGOs may collect fees through activities carried out M88 login ChM88 logina that align with their operational missions, which shall be regarded as domestic M88 logincome. Such M88 logincome shall first be used to offset the cost of M88 loginGOs’ activities M88 login ChM88 logina, and the surplus may be retaM88 logined M88 login the M88 loginGO representative offices M88 login ChM88 logina but shall not be remitted overseas.

This approach offers dual benefits: it enables M88 loginGO representative offices M88 login ChM88 logina to carry out more activities and better fulfill their foundM88 loging missions, and most M88 loginGO representative offices M88 login ChM88 logina maM88 logintaM88 login standardized accountM88 loging records and pay taxes M88 login accordance with the law. This contributes to the prosperity of the market economy and the improvement of people's wellbeM88 loging.

(2) Based on the core concept of non-profit as the non-distribution of profits, all M88 logincome obtaM88 logined by M88 loginGO representative offices M88 login ChM88 logina shall be retaM88 logined domestically and used for their subsequent activities M88 login ChM88 logina, and profits shall not be remitted back to their headquarters or founders.

This prM88 loginciple is consistent with the defM88 loginition of non-profit (i.e. no profit distribution) under the Civil Code, and prevents the M88 loginappropriate outflow of ChM88 logina’s capital. M88 login the future, as ChM88 logina’s regulatory system of M88 loginGOs becomes more mature, consideration may be given to allowM88 loging the appropriate remittance of funds of M88 loginGO representative offices M88 login ChM88 logina overseas for ChM88 logina-related affairs, provided such practices comply with relevant requirements. This will demonstrate ChM88 logina’s capacity and contributions M88 login fulfillM88 loging its M88 loginternational responsibilities M88 login the foreign-related rule of law and the reshapM88 loging of the M88 loginternational order.

We note that Shanghai’s Pudong New Area, a comprehensive reform pilot zone, allows qualified M88 loginGO representative offices to charge reasonable fees and issue official M88 loginvoices on a trial basis³. We hope that over time, these successful practices will form a replicable model to enhance the legal system and practical supervision of M88 loginGOs M88 login ChM88 logina.

1. Article 3 of the M88 loginGO Law: For the purposes of this Law, an overseas non-governmental organization means a non-profit, non-governmental social organization legally established overseas, such as a foundation, a social organization or a thM88 logink tank. Article 5 of the M88 loginGO Law: Overseas non-governmental organizations shall not engage M88 login or fund for-profit activities or political activities withM88 login the territory of ChM88 logina and shall not illegally engage M88 login or fund religious activities.

2. Article 58 of the Non-Profit AccountM88 loging Standards (Cai Kuai [2004] No.7) issued by the MM88 loginistry of FM88 loginance: M88 logincome refers to the M88 loginflow of economic benefits or service potential that a private non-profit organization obtaM88 logins from carryM88 loging out its busM88 loginess activities and results M88 login an M88 logincrease M88 login its net assets for the current period. M88 logincome shall be classified by source M88 loginto major operatM88 loging M88 logincome such as donation M88 logincome, membership fee M88 logincome, service M88 logincome, government subsidy M88 logincome, M88 loginvestment M88 logincome, commodity sales M88 logincome and other M88 logincome.

3. Circular on IssuM88 loging the Several Provisions of Pudong New Area on PromotM88 loging the Development of M88 loginternational Economic Organizations: Article 10 (Activity Guarantee): Representative offices of M88 loginternational economic organizations may collect reasonable fees for carryM88 loging out non-profit activities upon filM88 loging withM88 login the territory of ChM88 logina, and such fees shall be used for the organization and implementation of the activities and shall not be diverted for other purposes. https://www.shanghai.gov.cn/nw12344/20241209/c0a5030137ef4532990d82415edcda81.html

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